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Arbitration agreements not a cure-all against litigation, says Morgan Lewis’ Brian Berry
07/10/2021
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Brian Berry
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John VDLD
John van der Luit-Drummond is editor of International Employment Lawyer

Amid an increase in labour and employment litigation arising from the covid-19 pandemic, Morgan Lewis further expanded its high-stakes California disputes capabilities last week with the arrival of new partner Brian Berry, previously co-chair of Ogletree Deakins’ California class action practice.

Berry’s arrival continues the growth story of Morgan Lewis’ California-based team, following the addition of Michael Weil, who joined the firm’s San Francisco office from Orrick earlier this summer, and an eight-lawyer team from Sidley Austin in Los Angeles. 

With thousands of employment lawsuits filed nationally since the beginning of the pandemic, Berry sees that covid-19-related disputes will remain a concern to employers across most industries. “The bulk of these centre on employment discrimination, remote work and leave claims, and whistleblower claims,” he says. “This is particularly affecting the retail industry, which has seen employees operating in the workplace for most of the pandemic.

“As more companies implement vaccine mandates or require a return to the office, we expect to see a jump in discrimination claims around failure to provide accommodations, and potential whistleblower claims around workplace safety concerns. There hasn’t been an industry where these concerns aren’t front and centre.”

Class-action tide

In addition to individual claims, the pandemic will continue to spawn class-action lawsuits for the foreseeable future, says Berry. “On the wage and hour side, we’re seeing claims for uncompensated work related to temperature checks and other covid-19-related protocols, in addition to claims for uncompensated time, inaccurate record-keeping, and expense reimbursement related to work-from-home arrangements,” he adds. 

“In California, we continue to see an enormous volume of [Private Attorneys General Act] PAGA actions with no end in sight,” Berry continues. “Many of the procedural protections that exist for employers in traditional class actions are weakened or non-existent in PAGA actions, and many of the legal issues related to PAGA remain unsettled in state and federal courts. All of this creates fertile ground for the continued growth of PAGA actions in California.”

For employers looking to get ahead of potential covid-19 workplace disputes, Berry has the following advice: “After the abrupt switch to work-from-home last year, some employers’ pre-covid policies and systems do not account for the new realities of the remote workplace. Employers should proactively consider the kinds of work-related tasks that employees may be performing from home, even small increments of work, and make sure to have timekeeping and expense reimbursement protocols in place to handle them.”

Mass arbitration

Although many California-based employers continue to use arbitration agreements with class-action waivers, arbitration agreements should not be seen as a cure-all against litigation, says Berry. “An employer should weigh the risks and costs of potential ‘mass arbitration’ – where many would-be class members [file] identical individual claims in arbitration – when evaluating the utility of arbitration agreements. And employers should assess the risks that may arise from a PAGA action or a class action proceeding in arbitration, where the right of appeal is limited.”

Looking ahead, Berry explains that although the California legislature remains hostile towards mandatory arbitration agreements, the Ninth Circuit in Bonta recently concluded that the Federal Arbitration Act does not pre-empt Assembly Bill 51 – the most recent state legislation prohibiting mandatory arbitration agreements. “It was a 2-1 decision, with a spirited dissent by Judge Ikuta, and deviates from the law in other circuits,” he says. “So employers will want to continue to monitor Bonta, as it is ripe for rehearing en banc by the Ninth Circuit or review by the Supreme Court. 

In addition to covid-related litigation, Berry expects to see increased litigation involving college athletes. “Just last week, the National Labor Relations Board’s general counsel, Jennifer Abruzzo, issued a memorandum stating that certain college athletes are employees under the National Labor Relations Act and should be afforded all rights and protections under the statute. The memo will likely result in increased litigation and organising activity involving athletes at academic institutions, both private and public.”